Damped track : is this behavior expected?
The erratic motion appears to actually be due to the Path Animation 'Follow' setting - it seems to be interfering with the constraint. When the Follow setting is disabled the erratic motion no longer occurs and it snaps back to the rotation based only on the constraint.



The Damped Track constraint isn't really ideal for camera tracking - best to use the Track To since that is capable of maintaining the expected orientation of the camera (ie, so 'up' points towards the global 'up'). I believe Damped Track is better suited to bone or object rotations where it perhaps makes more sense (but only if the 'initial' rotation is not being modified before the constraint is evaluated).